THREADNEEDLE UK EQUITY INCOME Z GBP - Overview

This fund aims to maximise capital growth whilst also providing enough income to meet the yield requirement of the IA UK Equity Income sector (a yield 10% above that of the UK stockmarket). Manager Richard Colwell invests predominantly in large and mid-cap UK equities, forming his portfolios through a combination of macro-economic themes and fundamental stock analysis. He tends to take a fairly balanced approach, unlike certain peer group funds which can be more aggressively or defensively positioned.

Fund summary

Charges

Standard initial charge

3.00%

Initial charge via Bestinvest

0.00%

Additional bid/offer spread

0.00%

Annual management charge

0.75%

Ongoing charges figure

0.82%

Risks

Before investing make sure you have understood the risks relevant to the fund by reviewing our Risk Warnings section. Further information on the risks are contained in the fund's Key Investor Information Document, which we make available to you before you make a decision to invest, alternatively it is available on request.

Bestinvest view

This is a core fund for equity income investors. Colwell takes a “plain vanilla” approach, investing purely in UK stocks, shunning derivatives and avoiding the strong style biases that we sometimes see in the UK Equity Income sector. He enjoyed a successful period on the fund as co-manager alongside Leigh Harrison from 2010 before stepping up to lead manager in 2015. Harrison is now retiring, but the UK team has strength in depth with typically strong performance across the board. Colwell also has a strong track record in his own right.

Investment process

This is an unconstrained UK multi-cap portfolio, though in practice almost all investments are in FTSE 100 and FTSE 250 stocks - exposure to small caps is limited. Although the fund is guided by the house thematic and macro-economic views, the manager has a strong preference for fundamental stockpicking. This fund is managed in a flexible manner and benefits from an experienced UK desk, where the team double up as fund managers/analysts and carry out over 800 company meetings a year. The manager has a preference for companies with ‘solid’ management and generally steers clear of weak balance sheets. He also places a premium on companies which are able to generate a high level of cashflow. Yield is targeted at the portfolio level, so non dividend-paying recovery situations sometimes feature. The portfolio tends to have a fairly balanced structure – the manager sometimes tilts it in favour of defensive or cyclical stocks based on the macro view, but avoids aggressive skews.

Sector breakdown

Portfolio details

45-60 stocks with low turnover.

Constraints

Typical sector weights +/-11% versus benchmark, stock weights +/-5%.
There are some limits placed on the portfolio but these could result in significant divergences from the benchmark from time to time.

Average monthly relative returns

Bestinvest MRI

12/13

13/14

14/15

15/16

16/17

3 years

5 years

Career

3 years

5 years

Career

0.48%

-0.12%

0.49%

0.01%

-0.15%

0.11%

0.14%

0.14%

83.40%

93.80%

99.40%

Performance figures are based on the average of monthly
percentage returns relative to the benchmark index.

Richard Colwell

Colwell joined Threadneedle in January 2010, having previously been at Aviva from January 2007. Previously, he worked as a fund manager at Credit Suisse Asset Management from 2002 and was responsible for a range of institutional pension funds, the Sun Life of Canada closed funds, as well as retail portfolios. He started his investment career at Schroders as a pharmaceuticals analyst, then becoming a portfolio manager for five years. He joined the industry from the Bank of England. He holds a BA (Hons) in Banking & Finance and is an associate member of both the IIMR and CIB.

Track record

Richard Colwell has 12.4 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.14%.
During the worst period of relative performance (from December 2008 - March 2009) there was a decline of 6% relative to the index. The worst absolute loss has been 39%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.

Periods of worst performance

Absolute

-39%
(October 2007 - February 2009)

Relative

-6%
(December 2008 - March 2009)

Other funds managed

Start Date

THREADNEEDLE MANAGED EQUITY INCOME A

Jan 2010

THREADNEEDLE UK EQUITY INCOME C1

Oct 2015

THREADNEEDLE UK EQUITY INCOME D

Oct 2015

THREADNEEDLE UK GROWTH & INCOME C1

Jan 2010

Sector record since
December 2002 (12 yrs)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI)
measures the likelihood that the fund manager is adding value through their decisions.
It is based on their performance record over the course of their career, adjusted
for the amount of risk taken. MRI is an important contributor to our fund rating
system but it is also vital to take account of qualitative factors. It is also very
important to select funds to form a cohesive portfolio with an appropriate overall
risk level.

The value of your investment can go down as well as up, and you can get back less than you originally invested.

Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.